What is the process of trend formation?

Trend is the key analysis point in investment. If you analyze the trend, your transaction will be half successful. Therefore, trend analysis has always attracted much attention. There are various analysis methods, but most of the analysis methods are to tell We, the current direction of the trend, but few analysis methods can explain the process of trend formation, then have we thought about a problem, if you don’t even know the process of trend formation, then your analysis of the trend direction will definitely be Is it good? Today, let's take a preliminary understanding of the process of trend formation.

In the process of forming a trend, generally speaking, two conditions are required, one is a clear direction, and the other is a clear strength. Next, let us talk about these two contents in detail. The direction refers to the price going up or down. This up or down does not mean that if the price rises a little, it will go up, and if it falls a little, it will go down. As mentioned above, it needs to have a clear and distinguishable result. How to say it Woolen cloth? We all know that the market will not always go up or down in the process of rising and falling. It will always rise and fall. If there is always a fixed high and low point in the process of price rising and falling, and the price cannot break through, then in fact It can be understood that the current market is oscillating. At this time, the price seems to be in a box that cannot be broken. At this time, it can be understood that the price is in a state of no direction.

When the price breaks through this box, it means that the price may choose a direction next. Of course, it is not ruled out that the price will re-enter a box again and cannot break through, but it is different if the price has a clear direction. Simple , if the price trend is upward, then it should be able to continuously hit new highs. For example, the price is rising now, and it has risen to 3000 points. Break through 3000 points and reach above 3000 points. At this time, you can simply understand that the direction of the price is upward.

But is it enough to confirm that the direction of the price is upward? No, the upward direction of the price does not mean that the direction of the trend is also upward, because you are not sure whether the price can continue to rise in the future. For a simple example, I will take a small one now. If the stone is thrown forward, then we can be sure of the forward direction of this small stone, but how far can it be thrown forward? This depends on how much effort we used at that time, which is the same as judging the market. We are sure that the current market is upward, but how high it can continue to rise, we need to judge according to the strength of the price. If the direction of the price is upward , and at the same time the strength is relatively strong, then we can judge whether the price will continue to rise.

If the direction of the price is clear and strong, then it can be judged that the trend direction of the price has been established. If according to my technical system, the price has formed a trend prototype, it means that the trend direction has been established, because the formation of the trend prototype, It is necessary for the price to have a direction of ups and downs, and at the same time have the strength to reach a new high or new low (hitting 1.382 means that there is a strength of ups and downs, and at the same time it means the formation of a prototype). The above is the formation process of the trend direction. When the price has a direction and has the strength to move forward in this direction, it indicates the formation of the trend direction.